Archive for category gift certificates

This week, I spoke to merchants from the Historic East Village and answered questions about gift cards. Gift cards, or gift certificates, are subject to state and federal restrictions – some overlapping, some conflicting and some confusing.

“Can my business place expiration dates on gift certificates issued?” Yes. But federal regulations allow expiration dates as long as certain requirements are met. Requirements include:

allowing a purchasing consumer at least five years before expiration;

providing a toll free number or website where information about the card can be obtained;

providing information about replacing the card; and

informing of any fees charged against the balance and where information about the fees can be obtained.

In Iowa: Iowa law states that unredeemed gift card funds are considered abandoned after three years have lapsed since purchase or last use, compared with the five-year requirement in the federal regulations. The Federal Reserve Board chose to not preempt (overrule) state laws regarding abandonment of property which took effect before the federal five-year mandate. The board instead reserved the right to declare individual states’ laws preempted on a case-by-case basis. The board has not yet ruled on Iowa’s three-year abandonment law regarding unused gift cards, leaving open the possibility that a gift card issuer will have to turn over abandoned property to the state treasurer after three years, but honor gift cards for five.

“What are the reporting requirements after the three year period in Iowa?”

“What if I give gift cards to a charity or an auction and receive no money for them?”

Federal regulations create exceptions for cards issued for ‘loyalty, award, or promotional purposes.’ For example, shorter expiration dates are allowed. Significantly, there must be a disclaimer on the face of the card or certificate stating it was issued for loyalty, award or promotional purposes to qualify for this exception.
If you are confused, the Federal Reserve Board has a guide to gift cards.